ISU has farm bill decision tools

Iowa State University has new and updated tools on its Ag Decision Maker website to help farmers make informed choices regarding new USDA farm programs. Extension.iastate.edu/agdm/info/farmbill.html includes information files, decision tools and the

Apr 13, 2016

ISU has farm bill decision tools

Iowa State University has new and updated tools on its Ag Decision Maker website to help farmers make informed choices regarding new USDA farm programs. Extension.iastate.edu/agdm/info/farmbill.html includes information files, decision tools and the ISU Farm Bill Analyzer tool. The page is updated often.

Producers must make enrollment decisions for Agricultural Revenue Coverage (ARC) and Price Loss Coverage (PLC) by March 31. If you elect ARC, you have to choose between ARC-County (ARC-CO) and ARC-Individual (ARC-IC). This is a one-time decision lasting five years, the 2014-18 life of the 2014 Farm Bill.

“Since the farm bill tools became available on our website, they have been heavily used by Iowa producers and landowners,” says Alejandro Plastina, ISU Extension economist. “We’ve received helpful feedback. We continue to improve the spreadsheets to include refinements in the USDA programs and to address common questions from our users.”

One new tool is the Farm Bill Calculator, along with a simplified version of the existing Analyzer, including additional information on interpreting the simulation results. Both worksheets address five combinations of programs at the whole farm level: PLC for corn and soybeans, ARC-CO for corn and beans, PLC for corn and ARC-CO for beans, PLC for soybeans and ARC-CO for corn, and ARC-IC.

The Calculator reports annual payments for alternative combinations of farm programs, based on historical farm production data and the user’s expectations about planted area, prices and yields. A chart shows differences in net present values of payments across alternative combinations of programs. The Calculator is based on the data provided and doesn’t include any simulations.

The Analyzer still relies on simulations of prices and yields to reflect their uncertainty, but it focuses only on farm programs (no crop insurance), and it reports both annual expected payments and the probability that the actual payment may be lower than or equal to an expected payment. It also highlights the first- and second-best combinations of programs for each of the goals:

• minimize the probability of not receiving payments

• maximize low, but likely payments (payment surpassed 75% of the time by simulated payments)

• maximize high but unlikely payments (payment surpassed 25% of the time by simulated payments)

• maximize the probability of receiving payments greater than the expected payments